On Thursday, AK Steel Holding Corporation (NYSE:AKS) released guidance for the first quarter of fiscal year 2015 (1QFY15), after close of trading yesterday on the New York Stock Exchange.

The Ohio-based steel producer disclosed that it expects to report a net loss of 23-28 cents per share. The loss guidance provided by the company is much higher than the consensus loss per share estimate of six cents. Following this news, AK Steel stock tumbled 9.5% in after-hours trading on Thursday. The stock fell from $4.2 to $3.8.

This disclosure about the expected losses came on the back of lower-than-anticipated steel shipments during the three-month period. The US dollar has strengthened against major currencies of the world, making imports cheaper, and in turn shifting the US market focus towards imports.

The global steel production capacity is on the rise and China, the world’s biggest steel producer, is flooding the global market after domestic demand in China has fallen. On the contrary, in the US, which is the second-largest consumer of steel, the steel producers are experiencing a rough time due to competitive prices offered by China.

AK Steel’s 1QFY15 results expect steel shipments of 1.73 million tons, which would be down 14% compared to the 4QFY14. On the other hand, steel imports by US consumers in 2014 increased 60% year-over-year and stood at one million tons during the first two months of 2015 on average. Although AK Steel benefits from the reduced raw material prices and declining energy costs, the low quantities and the constantly decreasing selling prices outweigh the benefit.

It is not only the case with AK Steel, which has revised the earnings estimate, but another significant market player, Nucor Corporation (NYSE:NUE), has lowered earnings estimate citing the same reasons. China’s exuberantly high capacity of steel manufacturing and supply has turned the trade patterns downright. Even India, Korea, and the European Union are unable to cope with the oversupply and extremely competitive prices of China.

Steel producers in the US are looking up to the government to intervene and take trade action against the flooding caused by China. It is expected by the end of this month that the higher ups of steel companies throughout the US will be registering a complaint with the International Trade Commission against this dumping.

Out of the 20 analysts who cover AK Steel Holding stock, with an average 12-month target price of $5.3, four rate it a Buy and three have given it a Sell rating.

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AK’s travails are symptomatic of a much larger and longer-term problem — persistent global excess capacity. The root of that decades-old plague on free enterprise is government ownership, control, subsidization and protection of steel mills in less free parts of the world. For decades US steel, trade and economic policy has tended to deal with the world as we wish it were rather than as it actually is. The failure of the TPP to address currency misalignment, tax misalignment, industrial subsidies and state-ownership is just the latest chapter in ineffective and sometimes counterproductive public policies. The losers are firms like AK.